Commerce in vehicle parts faces some unique challenges not applicable to other forms of merchandise and products.
Vehicle parts fall generally into three categories: original equipment parts, aftermarket parts, and recycled parts. Original equipment parts and aftermarket parts are often supplied in much the same manner as other items: they are kept in warehouses and shipped when needed. Used, remanufactured, reconditioned, OE surplus, blemished OE, and OE discount parts (hereafter referenced collectively as “recycled parts”), however, have significant differences from other items. In many ways, each recycled part is unique in its character and circumstances. As discussed in earlier patent filings of the assignee, recycled parts can be difficult to properly match to other interchangeable parts in target vehicles, and further, recycled parts can have unique damage which must be repaired, and can have attributes such as original paint or options which render interchangeable parts unlike each other. These two issues have been specifically addressed by inventions of the assignee which are implemented on the assignee's web site www.car-part.com.
The fact that each part is unique and may have different conditions, colors, and at times accessories on an assembly, means that a given recycled part's usefulness to a buyer is different than a similar part that technically interchanges with the damaged part on a vehicle. Thus, while a site like www.car-part.com may have 150 million parts, that inventory is unlike the inventory of a seller of a conventional type of product, such as a new or aftermarket auto part seller. Specifically, an inventory of 150 million parts is best viewed as an inventory of 150 million different specific items, each available in a quantity of one. These individualities mean that recycled parts must be tracked individually at each step in the process so the buyer can understand the additional products and services (e.g., damage repair, painting, rework) associated with each part, and furthermore, the availability of a specific individual part, rather than another interchangeable part, is relevant to buyers in a way that is simply not the case with new parts. Indeed, in many cases required parts for a repair are not cataloged into a part interchange system—for example, trim parts and the like. These parts have even greater individuality than those which are catalogued by an interchange system.
A third way in which recycled vehicle parts are individual and unique is that they are not commonly inventoried. There is no central, synchronized ordering system or a central inventory management system spanning the universe of auto recyclers. Unlike, for example, airline tickets, inventory systems at major retailers, and the like, which operate out of a common database, the thousands of auto part recyclers across the country operate and sell parts out of their own respective systems throughout the day, which are not synchronized to a common database (such as www.car-part.com) until, for example, a nightly upload. Consequently, every recycler inventory system has its own inventory records which may mismatch with the inventory that is presented at derivative databases such as that collected and presented by www.car-part.com. This differs greatly from original equipment parts or aftermarket parts which are typically available in large quantities at a centralized warehouse and are ready to be shipped from the centralized warehouse as orders are received, thereby resulting in a relatively consistent handling and delivery process when original equipment or aftermarket parts are ordered.
Moreover, the inventory presented at a site like www.car-part.com is derived from a large number of inventory databases at individual recycler inventory management systems. Every one of these management systems is different, using different inventory coding and methods, requiring substantially different software to acquire and process each recycler's inventory for inclusion in a common database. Additionally, the fields available in each inventory management system differ substantially, and the availability of parts may also vary greatly. As one example, parts listed in a given recycler's inventory may be in one of several stages in the auto recycler's dismantling process. Some parts are inventoried while the vehicle is still at the salvage auction, others are inventoried in a holding pen at the recycling facility, and may be kept on a vehicle until needed, others are dismantled from the vehicle and placed in racks for storage until needed, and still others are dismantled from the vehicle but left in the vehicle in a storage yard. Some parts can be taken off the vehicle without dismantling the vehicle while other parts are more practical to take off when the entire vehicle is being dismantled. Inventory management systems generally attach codes to inventory records of parts to identify their status in this process; although there is a convention for these codes, because different recycling facilities have a different physical layout and work practices, the detailed significance of these codes can be different. For example, a code of W may mean that the part is in a local warehouse at one recycler, but may mean the part is in a remote warehouse or even in a readily accessible dismantling area at another recycler. Although the codes are standard, only the individual recycler is familiar with how parts are coded. There are other variations used in the industry; in some cases inventory is tagged with category codes at the vehicle level, which may override to location codes to identify where a part is in the dismantling process.
The process in which a single part is sold can thus be unusually complex. When a customer orders the part through a central database, the part may no longer be in inventory at the recycler, or the part may be in a condition which renders it not immediately available. As an example of the latter condition, the dismantling of an entire vehicle may be required to obtain the part. Some recyclers may refuse to undertake such a step for the sake of the sale of a single part, or there may be an inherent delay before a recycler is able to perform the required dismantling due to limited resources or queues at the recycler. This means that even for parts which are available from a recycler, an order for the part may have a complex outcome (something other than a completed sale as originally intended).
Another complicating factor is that auto recyclers typically supplement their own physical inventories by establishing brokering relationships with other parts suppliers (which may be other auto recyclers, aftermarket part suppliers, and/or original equipment part providers). While this practice increases the selling opportunities for part suppliers which participate in such brokering relationships, and increases the effective inventory of a brokering yard to include the parts they broker, it further complicates the logistics of acquiring a given part and results in another layer of inventory uncertainty, as brokered parts presented in an inventory system represent available parts at a time in the past when the brokering database was last updated. Furthermore, brokering may occur in multiple levels; a broker may offer parts that are available through another broker that in turn sources those parts from the ultimate part supplier.
While vehicle parts have always been in demand, recycled vehicle parts are increasingly popular with body shops and repair facilities because of their lower cost and like quality to original vehicle parts. The repair shop and auto salvage yard are integral parts of the insurance industry claims department supply chain that processes claims for customers involved in vehicle accidents; that supply chain includes shops that repair the vehicles (using, where possible, recycled parts from other vehicles) and finalize the claim from the accident, as well as recyclers that provide parts to shops and provide part inventory information to insurance estimators that make the determination of the optimal part for the repair facility to use in each repair.
Cycle time or repair time at the shop is very important to efficient handling of an insurance claim, for several reasons. First, the insurance consumer temporarily loses access to the car while it is being repaired, and is generally intolerant of a long delay while a vehicle is being repaired. Moreover, the insurance claim often includes coverage for a rental vehicle, which must be reimbursed by the insurer. Additionally, because of the pressures of insurance cost management and consumer demands, body shops have adopted lean manufacturing or “just in time” techniques. Shops often use workflow management systems to schedule production. For example, to reduce cost and improve efficiency, repair/body shops often repair vehicles in a production line type environment, which reduces costs but has the side effect that part unavailability for one vehicle can prevent processing of more than just that one vehicle. Furthermore, body shops do not typically inventory parts, and maintain a minimal layout for storing and maneuvering cars while under repair.
Thus insurance companies, body shops and repair facilities are generating ever increasing demand for recycled parts while at the same time, these purchasers are demanding greater certainty in the availability of requested parts to enable a ‘just-in-time’ repair supply chain. The auto recycler has thus become a part supplier to a repair shop assembly line where the margins for error are very low and each part in the supply chain is unique. In this environment, the auto recycler has unique challenges. Because each part is unique and coming from a limited supply of salvage vehicles, if the recycler is unable to supply the part the buyer chose, the recycler may not be able to supply an alternatively acceptable part to the buyer, even though there may be interchangeable parts, due to different colors, damage levels, accessories, delivery times, and the like. This then creates a disincentive to use a central database to locate recycled parts, unless and until a means exists for confirming the availability of parts located through the central database.
Given the size of the distributed system, with over 4,400 recycler systems, it is simply not realistic or feasible, with current hardware constraints, to maintain real time synchronization of part availability information across all applicable systems and for every part search. As a result, latent part unavailability continues to be a problem in the recycled part industry. This has challenged independent recyclers to find a mechanism to present not only the widest possible variety of parts, but certainty of delivery of those parts through centralized databases such as www.car-part.com, notwithstanding the many various factors mentioned above which create the potential that a particular part, while presented in a centralized database, is actually unavailable.
As a consequence of the complexities in delivery and logistics of part delivery, major parts purchasers such as insurance companies have faced a significant challenge in their efforts to include the full available inventory of recycled parts in repair estimates. There is a significant need, however, to include recycled parts in such estimates because of the reduction of cost that can be realized, without loss of quality. In some cases part buyers have limited their purchasing only to a small number of suppliers who hold parts in their own inventory, because those suppliers have more predictable delivery times and performance. This has, in turn, constrained the marketplace for recycled parts and reduced competition and increased prices to the end consumer.